Tag Heuer chief executive Jean-Christophe Babin talks Tiger Woods, trends and timepieces with Sarah McInerney.
Commencing its 150th anniversary celebrations on the back of the Tiger Woods sex scandal might have made some executives at Tag Heuer nervous but there were positives and negatives to this association, the company's chief executive Jean-Christophe Babin says.
Woods sits alongside the likes of actor Leonardo DiCaprio, tennis star Maria Sharapova and motor racing champion Lewis Hamilton as a brand ambassador for the luxury watchmaker. When the news of his car crash and the subsequent allegations of his multiple extramarital affairs broke, Tag Heuer, like Nike, stood-by the golfer.
Taking a position early and communicating this to the market, plus not relying on one celebrity for promotional work, helped to minimise the impact of the scandal on the brand, Babin said.
“Very quickly we have taken sides,” Babin said. “We stay with him but, as he wants more privacy and as he won't play for a while, in the countries where the issue is quite sensitive we won't use him much.”
Consequently, in the US, Woods's image has been removed from the company's advertising. However, it remains on the Tag Heuer website and, in China, use of it has been increased.
“In China conversely you have Tag Heuer with Tiger Woods everywhere because [with] the Chinese it rather increases their esteem,” he said. “In China, by tradition, your success is measured by your number of mistresses.”
Victor Stango and Christopher Knittel, economics professors from the Graduate School of Management at the University of California, Davis, said the scandal cost shareholders of Woods's sponsors up to $US12 billion ($13.5 billion).
They looked at the shareholder returns for eight of Woods's sponsors – although not Tag Heuer – comparing them with the performance of the stockmarket as a whole plus that of those companies' major competitors.
“Our analysis makes clear that, while having a celebrity of Tiger Woods's stature as an endorser has undeniable upside, the downside risk is substantial too,” Stango said.
But Babin said Tag Heuer's experience differed. He said the company gained market share in December and sales of the one product Woods co-designed, the golf watch, had the highest sales ever in that month.
“I can tell you, on Tiger, there is zero damage,” he said. “So I don't know how they calculated that [figure]. Yes we received some letters off angry people because we are siding by Tiger so the question is, were they Tag Heuer users or not? Most were not. Would they ever acquire Tag Heuer? Most not as well.”
Surviving the financial crisis
The scandal topped off a challenging year for Tag Heuer, courtesy of the global financial downturn. Figures on the Swiss watchmaking industry as a whole showed that total watch exports from that country fell by 22.3 per cent last year.
Yet, in Australia, sales still grew, although Babin said this was in single digits not double digits, as had been experienced in previous years.
“Generally speaking most markets suffered last year,” he said. “Some have bounced back already spectacularly. China is a good example.”
Growing a lifestyle brand
Despite the financial uncertainly, Tag Heuer progressed with expansion plans, launching the limited edition Monaco V4 watch last October, which retails for $125,000.
In January it opened a new boutique in Melbourne's Collins Street and launched the Formula One women's collection. This was co-designed by Sharapova and features both stainless steel and ceramic.
Its desire to grow into a lifestyle brand has caused the offerings to diverge from its mainstay of watches to include men's glasses, women's sunglasses and mobile phones.
Babin aims to challenge Vertu for the position of leader in the luxury mobile market, with plans to launch a new phone – possibly a smartphone - in the next 18 months. Competition in this sector will also come from luxury fashion brands Dolce & Gabbana and Versace.
“It is not enough to have a name, it has to be consistent with your DNA,” he said. “So for Tag Heuer I mean, made from technology and design and being so close to watchmaking … it is legitimate.
“I have never had a retailer or consumer saying 'Tag Heuer mobile, why?' It looks obvious to people. I am not sure with a fashion brand it's so obvious.”
Timepieces for the collector
New watch releases planned for its 150th anniversary will pay tribute to the company's long tradition of watchmaking.
“There are some pieces that will be revivals of some of the more emblematic models of our history,” Babin said. “The first one is the Silverstone that will hit the market probably around Basel [World] time.”
The Silverstone was first launched in 1974 and was unique at this time because of its square face. In searching for models to revive for the anniversary, Tag Heuer monitored the most popular websites and blogs for collectors and found the Silverstone was the Tag Heuer model most people wanted to see revived.
Collectors will have to wait until March, when the watch and jewellery show Basel World is held, to get their hands on this limited edition timepiece.
“It is one of the most sought-after vintages because the production in the '70s was very, very few, [and so] collectors are crazy about it,” Babin said.
“We have tried to make an exact replica even though quality wise and performance wise it's a watch of the 21st century.”
Also being re-released this year is the Calibre 1887, which pays homage to the oscillating pinion, one of Tag Heuer's biggest contributions to watch making.
With the company giving Woods privacy to deal with his personal problems, his involvement with the 150th anniversary celebrations is unclear.
However, Babin is certain of one thing – when he does return, it will be huge.
“As a global brand it would have been stupid to stop partnering with him because he still is and will remain for the next 10 years the best golfer ever, that's for sure,” he said.
“He will resume golfing and when he will resume golfing it will be one of the biggest media [buzzes] ever.”